In an effort to speed up the energy deregulation process, the Federal Energy Regulatory Commission (FERC) passed a federal order in December that will give incentives to utility companies who turn over the control of their transmission assets to regional transmission organizations (RTO's).

Currently, 100 separate utility companies control the nation's power grid, which often makes it difficult to move thousands of megawatts of energy across state borders into another utility company's territory. By consolidating control of the power grid to a small number of RTO's instead of individual utilities, the transfer of power can become more efficient.

Since 1996, when the FERC ordered that there be open access to the nation's power lines, wholesale power companies have had moderate success delivering energy to customers across state lines. The new FERC order seeks to someday have a seamless power transmission grid that will span the entire country, leading to greater competition between wholesale power companies and, in the long run, lower prices and better service for customers.

The federal order will offer a variety of rewards to power companies that submit proposals for transferring control before January 15, 2001. In addition, the order may eventually punish power companies that refuse to give up control. Already, a group of power companies have joined together and submitted a proposal to the FERC to form a publicly traded, independent RTO that will consolidate the control of power transmission throughout their region.

Source: Deregulation Inc. Webzine, December, 1999